Banning Airbnb Hasn’t Had Much Impact in Berlin—Yet

On May 1st of this year, Berlin enacted a uniquely broad law limiting short-term apartment rentals, which had exploded thanks to AirBnB and similar platforms. The practice was seen as putting additional pressure on the city’s already-strained housing market, as more than 14,000 apartments were devoted to short-term rentals prior to the law’s enactment.

In a lengthy new report, CityLab finds that the results of the ban have so far been uneven. Airbnb listings still show plenty of vacation apartments available in Berlin. In fact, they’ve slightly increased after cratering when the law was announced.

In part, that’s because enforcement of the law has been gradual. Under the law, those who run vacation rentals in apartments where they don’t also reside face fines of over $100,000. But they receive two warning letters, which they can appeal, before having to go to court. One Berlin leader told Citylab that hundreds of cases under the new law are in progress, and will “send a strong message” when they result in convictions.

In the meantime, one community activist told Citylab that his neighborhood, Wilhelmstrasse, has seen little relief from the tourist takeover since the law went into effect. Longtime residents have continued to be squeezed out by a high concentration of dedicated vacation rental units, and noise, trash, and other tourist misbehavior continue to be a problem.

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At the same time, the law has irked some Berlin residents by limiting their ability to rent an extra room, or rent their apartment while they travel elsewhere. One told Citylab he’s being treated as “collateral damage” of a law primarily intended to shut down large-scale operators of units used only for short-term rental.

When the law went into effect, it was expected to return as many as 10,000 apartments to the residential rental market. Those results haven’t appeared yet either, though it’s too soon to judge if they eventually will. With cities from Barcelona to San Francisco to New York moving to limit Airbnb activity, city governments worldwide will be watching carefully.

This Stock Exchange Is Offering Gamers a New Place to Trade Virtual Goods

Normally the place to buy or sell shares in Germany’s top companies, Deutsche Boerse is launching a new exchange for people to trade virtual goods from video games, tapping into a multi-billion U.S. dollar market.

The stock exchange operator, in the process of merging with the London Stock Exchange, has formed a joint venture, dubbed Switex, with Hamburg-based fintech start-up Naga Group to set up the new platform, it said on Thursday.

It will allow gamers to trade virtual goods, called in-game items, which can range from weapons used in games such as Activision Blizzard’s Call Of Duty atvi to furniture for Electronic Arts’ ea life simulation game Sims.

Such items have become an important source of revenue for game developers as more games have become offered to online players for free. Depending on the game, players need to win or purchase certain items to advance to higher levels.

“At the moment there are few opportunities for players to legally trade game items,” Deutsche Boerse said in a statement.

The market for in-game items is estimated to reach a value of more than $46 billion next year and is expected to grow by an compound annual rate of more than 6%, according to research firm Super Data Research.

There are already some online market places for in-game items where virtual Star Wars lightsabers dis are on offer for between 7.07 and 94.30 pounds ($8.94-119.21) and Clash of Clans gems go for between 7.29 and 62.35 pounds.

Deutsche Boerse and Naga said the exchange operator’s new platform would offer a “fair, secure and legal environment” for trading. Naga, which will control the joint venture, said the platform would be launched between April and June next year.

Deutsche Telekom Says Outage May Be the Work of Hackers

Hundreds of thousands of Deutsche Telekom customers in Germany have been hit by network outages that could be the work of hackers, the company and government security experts said on Monday.

Deutsche Telekom said as many as 900,000, or about 4.5% of its 20 million fixed-line customers, began to have problems connecting to its network on Sunday afternoon.

The outages affected certain customer routers which are used to dial into the network and offer phone, Internet access and online TV reception, the company said.

Telekom said on Monday its security measures appeared to be taking effect and that the number of customers affected had declined to around 400,000 by 1200 GMT. “There is a clear improvement in the current situation,” a spokesman said.

Customer complaints registered on the site Allestoerungen.de (Breakdown) showed a surge at 1400 GMT on Sunday that peaked around 1600 GMT, then picked up again on Monday.

“Based on the pattern of errors, it cannot be ruled out that the router has been targeted externally, with the result that it can no longer log on to the network,” Deutsche Telekom said in a statement on its website.

German security officials said the outages at Deutsche Telekom may have been caused by hackers. “It obviously looks like the work of hackers,” several government sources told Reuters.

Deutsche Telekom said its technology experts have identified the problem as stemming from how some customer routers connect to the network, but declined to give further details, saying the company was still investigating the outage.

The company suggested that users having connection problems unplug their router, wait 30 seconds and then restart their device. But if problems continued, the network operator advised them to disconnect their equipment from the network.

Allestoerungen.de, which uses data from DownDetector.com, reported tens of thousands of complaints across Germany ranging from Berlin, Hamburg and Duesseldorf in the north and Frankfurt, Stuttgart and Munich to the south.

Deutsche Telekom said the rest of its customers could use its fixed-line network without any issues.

Some subscribers suggested that Deutsche Telekom may not be aware of the extent of the problems.

“Most of the customers can’t report their complaints because the Telekom hotline and online customer center are not reachable,” said Facebook user Ernst Schneider, a Telekom customer who noted that his own problems persisted on Monday.

Deutsche Telekom shares were down 0.5% at 14.71 euros at 1408 GMT on Monday, while the German blue chip index was down 0.7%.

Germany Culling 16,000 Turkeys Amid Bird Flu Outbreak

A case of high risk H5N8 bird flu has been confirmed in the German state of Lower Saxony and about 16,000 turkeys on the farm will now be culled, authorities said on Thursday.

The case was confirmed in Cloppenburg in north Germany and is the first farm-based case in Lower Saxony, one of Europe’s largest poultry production regions, the state’s agriculture ministry said.

Several European countries and Israel have found cases of H5N8 bird flu in the past few weeks and some have ordered that poultry flocks be kept indoors to avoid the disease spreading.

The contagious H5N8 strain has been repeatedly found in wild birds in much of Germany in recent days and the country’s government has tightened sanitary rules for farms and warned it may order poultry to be kept inside.

Most outbreaks involved wild birds but Germany, Hungary, and Austria also reported cases in domestic duck and turkey farms where all poultry had to be culled. A case was also reported on a farm in Denmark on Monday.

Another case was reported in Austria’s Salzburg region on Thursday in a wild duck which tested positive close to the Bavarian border. The Salzburg veterinary authority ordered farmers in more than 40 municipalities along the big lakes and rivers in the area to keep poultry indoors.

Merkel Says She Will Seek Fourth Term as German Chancellor

Angela Merkel announced on Sunday she wants to run for a fourth term as German chancellor in next year’s election, a sign of stability after Britain’s vote to leave the European Union and the election of Donald Trump as the next U.S. president.

Despite a voter backlash over her open-door migrant policy, the 62-year old conservative said she would stand again in the September election, ending months of speculation over her decision.

“I thought about this for an endlessly long time. The decision (to run) for a fourth term is—after 11 years in office—anything but trivial,” Merkel told a news conference after a meeting of senior members of her conservative Christian Democrat (CDU) party convened to prepare for the election.

Some 55% of Germans want Merkel, Germany’s eighth chancellor since World War Two, to serve a fourth term, with 39% against, an Emnid poll showed on Sunday, highlighting that despite setbacks, she is still an electoral asset.

Merkel has steered Europe’s biggest economy through the financial crisis and euro zone debt crisis and has won respect internationally, for example with her efforts to help solve the conflict in Ukraine. U.S. President Barack Obama last week described her as an “outstanding” ally.

With Trump‘s victory in the United States and the rise in support for right-wing parties in several European states, some commentators see Merkel as a bastion of Western liberal values.

“Angela Merkel is the answer to the populism of this time. She is, as it were, the anti-Trump,” party ally Stanislaw Tillich, premier of the state of Saxony, told the RND newspaper group, adding she stood for reliability and predictability.

However, her decision last year to open Germany’s borders to around 900,000 migrants, mostly from war zones in the Middle East, angered many voters at home and dented her ratings.

Her party has slumped in regional elections in the last year while support for the anti-immigrant Alternative for Germany (AfD) has swelled.

In September, after a heavy defeat for the CDU in a Berlin state election, a humbled Merkel surprised the country by saying she wished she could turn the clock back on the migrant crisis, though she stopped short of saying her policy was a mistake.

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If re-elected, her responsibilities will range from helping lead talks with Britain on its withdrawal from the EU, soothing tense relations with Turkey, a crucial partner in the migrant crisis, and developing a relationship with Trump.

Domestically, her biggest challenge will probably be managing the integration of refugees in an increasingly divided society and keeping Europe’s powerhouse economy on track.

An Emnid poll on Sunday put Merkel’s conservative bloc down one point at 33 percent, nine points ahead of her nearest rivals, the Social Democrats (SPD), with whom she shares power.

In a system where coalition governments are the norm, many pollsters see another ‘grand coalition’ as the most likely option after the election, although the rise of the AfD makes coalition arithmetic more complicated.

The SPD has not decided whether its chairman Sigmar Gabriel, Vice Chancellor and Economy Minister, will run against Merkel.

One of the SPD’s deputy leaders, Ralf Stegner, said it would be a mistake to underestimate Merkel but that the “myth of invincibility” was over.

Merkel, who grew up in Communist East Germany, is a physicist who only became involved in politics after the fall of the Berlin Wall in 1989. She is seen as a talented negotiator but has also shown a ruthless streak.

A Protestant woman in a mainly Catholic and male-dominated party, at least when she became its leader in 2000, Merkel never built up a regional power base but over the years she has sidelined her main male rivals and has no obvious successor.

She still requires the official backing of her Christian Social Union (CSU) allies in Bavaria, who have fiercely criticised her open-door migrant policy. CSU head Horst Seehofer welcomed her decision on Sunday.

“We now want the trust of the population for another four years and therefore it is good that we have clarity,” he said.

Germany has no limit on the number of terms a chancellor can serve. By standing again, Merkel, who said she wanted to serve the full fourth term, could end up matching the 16 years in office of her former mentor, Helmut Kohl. It was Merkel herself who broke with Kohl and told her party in 1999, in the midst of a funding scandal, that it should move on without him.

Volkswagen Sets Out on a Long Road Into an Electric Future

Volkswagen AG’s trumpeted ‘biggest restructuring program ever’ in the wake of Dieselgate looks radical by its own standards, but it’s less so by anyone else’s.

VW confirmed earlier it intends to cut 30,000 jobs in the next five years, double the operating margin of its core brand, and learn how to transition to electric vehicles.

The grandly-titled “Pact for the Future” is a very German, very VW-like compromise that puts a premium on keeping industrial peace and creating deep stores (or silos, if you prefer) of in-house knowledge.

There’s no denying that VW will change profoundly over the next five years: chief executive Matthias Müller has already grasped the need to move away from combustion engines–especially the fatally-tainted diesel–and towards ‘electromobility’. He’s promised to have 30 electric or hybrid models in showrooms by 2025, accounting for 25% of group sales. Connected and autonomous capabilities are also now being given top priority.

“The Pact for the Future is the biggest modernization program in the history of our core brand,” Müller told a press conference Friday.

It certainly reflects that the desired change will need a different kind of workforce: electric engines are less complex than combustion ones and need far fewer people to make them. Meanwhile, the company wants to build its own in-house expertise in electric powertrains and, ahem, software (it’s not what you think, really).

Management is working under tight constraints with regards to labor, which has half of the company’s board seats and is routinely backed at shareholder level by the state of Lower Saxony. As a result, the 30,000 job cuts are a lot less drastic than they seem. Only 23,000 of the jobs are in Germany, mainly in engine production and plastics. Around 9,000 new jobs will be created, almost all in Germany. The net loss of 21,000 jobs is barely 3% of the company’s total workforce. And those who remain will have a job guarantee until 2025, according to union boss (and company vice-chaiman) Bernd Osterloh.

The whole will be achieved without any compulsory redundancies from the group’s ‘core’ workforce. Workers on temporary contracts will bear the brunt.

“I’m sorry for those affected but the brand’s situation leaves us little room for maneuver,” brand chairman Herbert Diess said.

By 2021, even if all goes well, VW will still have some 600,000 workers making a little over 10 million vehicles a year worldwide. For comparison, General Motorsgm currently needs 216,000 and Toyota Motor tm 346,000 to make roughly the same amount.

No wonder that Diess stressed the need to improve productivity by 25%, and ensure savings of 3.7 billion euros ($4 billion) a year by 2020. But even that will leave the core VW brand with a sales margin of only 4% at the end of the period (GM is looking for over 10% by that time).

Nor was there much information Friday on how VW expects to finance the transition, fresh from an estimated $20 billion hit from the diesel scandal. There was no mention, for example, of raising money by selling a truck division which is not really central to the group’s identity.

It would be silly to write VW off. This isn’t the first existential crisis it has faced, and Germany’s largest employer can always count on government to support it with a friendly regulatory framework. Already this year, Berlin has stepped up official subsidies for e-vehicles and associated infrastructure, knowing that there’s too much at stake, economically and politically, for it to do less. The threat from the likes of Tesla Motors tala and other disruptors is too clear.

And despite the damage to VW’s brand from Dieselgate, it starts on a long transition from a position of strength, accounting for nearly one in four vehicles sold in Europe. Whether that will be enough to guarantee it success in mastering so many new disciplines at the same time–only time will tell.

This Man Is Likely to Be the Next President of France

With big elections coming up, Europe’s power structure will continue to churn. But don’t expect too much change too fast.

1. Veteran conservative Alain Juppé will be elected president of France in May, beating Nicolas Sarkozy to the nomination from the center-right UMP party, and seeing off the Front National’s Marine Le Pen in the run-off. But hey, it’s France. Don’t expect it to change too much.

2. Across the Rhine, Angela Merkel will win a fourth term as Chancellor of Germany, heading a renewed “Grand Coalition” with the Social Democrats. However, the two stalwarts of Germany’s political mainstream will leak votes to fringe parties on both the left and right, mainly to the anti-foreigner Alternative für Deutschland. Again, expect continuity.

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3. The euro will overtake the pound. Concerns about the U.K. economy will grow, further straining Prime Minister Theresa May’s government. Meanwhile, a rebound in inflation will stop the European Central Bank from meaningfully extending its quantitative easing program, driving the euro higher—at least until the rise in long-term interest rates on bond markets revives fears about the Italian banking system and economy. May will likely trigger Article 50 of the EU’s treaty, formally starting the thorny process of separation. And after September, with Juppé and Merkel enjoying their fresh mandates, a Brexit compromise will start to take shape. But don’t expect too much progress—talks are likely to kick difficult decisions about trade and migration way down the road under the guise of a long ‘transitional’ period.

New Bird Flu Outbreaks Reported in Germany, Switzerland, Austria

Germany, Switzerland and Austria reported new outbreaks of a severe strain of bird flu on Saturday in the latest in a series of cases across Europe.

The H5N8 virus has also been found in Hungary, Poland, the Netherlands, Denmark and Croatia.

In Germany, the state of Schleswig-Holstein reported one case of bird flu confirmed at a farm where 30,000 chickens would now be culled. The state’s agriculture ministry said an area of 3 square km (1.2 square miles) had been sealed off.

In Berlin, the federal agriculture minister, Christian Schmidt, said the government had set up a crisis management desk.

The Austrian Agency for Health and Food Safety confirmed a second outbreak at a chicken farm in its western Vorarlberg province close to the German and Swiss borders and said 4,000 would be culled.

An Austrian poultry farm close to the chicken farm had tested positive for H5N8 on Friday.

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A protection zone with a radius of at least 3 km and a surveillance zone with a radius of at least 10 km around the infected holdings will be created to keep migrating birds from transmitting the disease to farm poultry.

Bird flu was also confirmed in dead birds along Lake Geneva in Switzerland on Saturday.

Austria and Switzerland earlier this week took steps to prevent the spread of the virus to domestic poultry after discovering the disease in wild ducks around Lake Constance.

Volkswagen’s Dieselgate Scandal Just Got Bigger

Two new developments in 48 hours have ripped new holes in Volkswagen’s efforts to present itself as a company trying to come clean about its diesel emissions scandal. At least one of them may have serious financial consequences for Europe’s largest carmaker.

Second, German prosecutors have widened their criminal investigation into whether VW misled investors by concealing the extent of the ‘dieselgate’ scandal to include Hans Dieter Pötsch, who was promoted to be supervisory board chairman last year after the scandal broke. Having been a key member of the group’s management board all through the years when VW was selling its tainted cars in the U.S., Pötsch was a controversial choice at the time—and now in the crosshairs of German prosecutors.

The first incident, if confirmed, would further erode VW’s defense that the scandal was plotted by a handful of rogue engineers at its headquarters in Wolfsburg. Even worse, it implicates people who were supposed to have been brought in to clean up the mess. The newspaper Bild am Sonntag dug up minutes of a meeting in February 2013 at which Axel Eiser, Audi’s head of powertrains, allegedly pressed VW executives to deliver the software as soon as possible:

“When will we have the cycle-optimized shift program?…(the program) “needs to be configured to be 100% active on the dyno, but only 0.01% in the hands of the customer.”

Bild reported that Audi had continued to sell cars that ran the software until May of this year, nine months after the scandal broke. That is less scandalous than it sounds. U.S. regulators are much less bothered with carbon dioxide emissions than with nitrogen oxides. However, it does at the very least underline how much VW swallowed its own propaganda when it came to designing emissions control systems.

EU legislation, which was written under the heavy influence of the auto industry, allows software to shut off emissions control systems in cases where to run them would damage the engine. Bild reported that the software package was designated as “warm-up” mode, but actually kicked in if it realized that no-one was turning the steering wheel. That suggests it was really only looking to recognize lab conditions, not looking to protect an engine on a cold morning in the Alps.

Embarrassingly, the same Axel Eiser used such technicalities to defend the company in the EU Parliament in July (the German-language stream can be seen here), saying that the company’s critics didn’t understand the complexity of all the factors involved.

“Many self-appointed NGOs are not necessarily in a position to carry out measurements on the ground taking into account all the relevant aspects,” Eiser said in a hearing where he and other VW executives took pains to stress how they had learned the lessons of the scandal.

VW Brass Looking Tarnished

But the more damaging revelation of the weekend could yet be that prosecutors in Brunswick (Braunschweig) have now formally extended their criminal investigations to Pötsch. That investigation focuses on whether VW responded adequately to warnings from an internal investigator to CEO Martin Winterkorn over a year before the issue became public.

It isn’t clear whether Winterkorn read or understood the e-mailed warnings, but the 16-month gap between them and the day VW admitted the problem to investors is the subject of a class-action lawsuit by investors seeking up to $9 billion in damages. That suit is probably the biggest remaining financial risk to VW now that it has settled its issues with U.S. regulators for $15 billion. On Sunday, VW said that it “reaffirms its belief that the Volkswagen Board of Management duly fulfilled its disclosure obligation under German capital markets law.”

VW’s controlling shareholders–the Porsche and Piëch families along with with the German state of Lower Saxony–elevated Pötsch to the chairmanship of the board when Winterkorn, their intended candidate, was forced to resign. The appointment of such a senior insider–along with Porsche head Matthias Müller as CEO–immediately provoked suspicions that the company was more concerned with covering its tracks than with getting to the bottom of the matter, as it promised to do in public. Subsequent disclosures, like that of a whistleblower at VW’s U.S. operations who alleges the company fired him after he warned IT employees against destroying evidence, haven’t exactly helped create an image of honesty either, even if the employee in question, Daniel Donovan, subsequently withdrew the suit.

VW has commissioned a thorough investigation of the affair from law firm Jones Day, whose team will present their report to a small board committee headed by Pötsch. VW had originally promised to publish at least some preliminary findings in time for its annual shareholder meeting in May, but subsequently changed its mind, saying it would prejudice ongoing investigations.

How a Racial Slur Has Made the Nasty Spat Between China and Europe Even Worse

Rule No. 2 is follow Rule No. 1, especially when you have a high-ranking government visit going on.

No one seems to have told that to Günther Oettinger, Germany’s top official at the EU Commission and a key party ally of Chancellor Angela Merkel. China’s Foreign Ministry is seething at comments the Commissioner made in a non-public speech last week that found their way onto the Internet. Oettinger referred to Chinese people as “slanty-eyed” and mocked the perceived uniformity of the country’s officials.

To widespread guffaws from an audience of business men and women in Hamburg, the 63-year-old Christian Democrat railed about “nine men, one party, no democracy, no female quotas—and so, consequently, no women—all in the same dark blue, single-breasted suit, all of them with hair combed from left to right and creamed with black shoe polish.” (He added a barb at Germany’s liberal drift later, jokingly warning that a future Berlin government will introduce “mandatory gay marriage.”)

Having taken a few days to decide how best to respond, China’s Foreign Ministry finally let rip Tuesday, with a spokeswoman accusing Oettinger of a “baffling feeling of superiority” that is common among many Western politicians.

“We hope that they will learn to observe themselves and others objectively, and to respect others and treat them as equals,” the spokeswoman continued.

Oettinger, who has ridden out many other gaffe-related scandals, is unrepentant. He told the newspaper Die Welt over the weekend that: “It was a careless expression which was in no way meant disrespectfully towards China.” He’s been backed up by the European Commission which has also refused to apologize on his behalf, or even to investigate the incident, according to the Euractiv website. A Euractiv reporter collared him briefly outside the Commission HQ in Brussels Tuesday and summarized their conversation thus:

Oettinger: everything has been said. There is nothing to apologise for.Me: but there is a big scandal.O: there is no scandal.

Oettinger’s comments come at a sensitive time for EU-China relations: the EU is still refusing to acknowledge China’s status as a”‘market economy,” something that would make it harder for the EU to take protective trade measures against it under World Trade Organization Rules. At the same time, European politicians are upset at the way China Inc. is buying up European companies while refusing to allow equivalent access to its market in many sectors.

Midea, an ostensibly private Chinese business, bought Kuka AG, a German maker of industrial robots, in July, sparking a month of intense soul-searching in Berlin. But things really heated up last week when Merkel’s government blocked the planned takeover of Aixtron AG, which makes equipment for semiconductor companies, at the urging of U.S. intelligence agencies on security grounds. China accused Berlin of “delusional ‘Yellow Peril’ paranoia” in response.

All of which meant that German vice-chancellor Sigmar Gabriel’s official visit to China this week was likely to be a bumpy one. And so it has proved. A joint appearance at a conference with Chinese Commerce Minister Gao Hucheng was cancelled Tuesday, according to the magazine Der Spiegel, while Gabriel was also stood up on short notice by Liu He, officially vice-chairman of the National Development and Reform Commission, and a key advisor to President Xi Jinping, who’s seen by some as the second-most influential person in the country, ahead even of Premier Li Keqiang.